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Dominic O'Hanlon became the CEO of rhipe Limited (ASX:RHP) in 2014. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Dominic O'Hanlon's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that rhipe Limited has a market cap of AU$300m, and is paying total annual CEO compensation of AU$1.1m. (This is based on the year to June 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$477k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$142m to AU$570m. The median total CEO compensation was AU$757k.
Thus we can conclude that Dominic O'Hanlon receives more in total compensation than the median of a group of companies in the same market, and of similar size to rhipe Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at rhipe has changed from year to year.
Is rhipe Limited Growing?
rhipe Limited has increased its earnings per share (EPS) by an average of 94% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 100%.
This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has rhipe Limited Been A Good Investment?
Most shareholders would probably be pleased with rhipe Limited for providing a total return of 111% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount rhipe Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling rhipe (free visualization of insider trades).
Important note: rhipe may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.